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Part a Donahue Ltd purchased a plant on 1 July 2018 for N$300 000. The entity incurred transfer fees of N$90 000. The expecte
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Answer #1
Cost -300000
Transfer fees -90000
Dismantling costs -200000
Present value as on 1st July 2018
Dismentaling costs Allowance
Future value 200000 Future value 75000
Rate 6.30% Rate 6.30%
Useful life 12 years Useful life 12 years
Present value = Future Value/(1+r)^n Present value = Future Value/(1+r)^n
=200000*1/(1+0.063)^12 =75000*1/(1+0.063)^12
=200000*0.480 =75000*0.480
=96080 =36000
Net costs =96080-36000 60080
Present value as on 1st July 2019
Future value 220000
Rate 6.30%
Useful life 11 years
Present value = Future Value/(1+r)^n Present value = Future Value/(1+r)^n
=220000*1/(1+0.063)^12 =75000*1/(1+0.063)^11
=220000*0.511 =75000*0.511
112345 38325
Net costs =112345-38325 74020
Debit Credit
Plant 13940
To Dismantalling liability 13940
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